CHAMPAIGN, Ill. After six months of steady decline, the University of Illinois Flash Economic Index has fallen below the 100 mark, the dividing line between growth and contraction of the state economy. This is the first time since November 1992 that the Index has been below 100.
The March reading of 99.7 does not reflect the kind of precipitous decline that struck Wall Street during the first quarter of 2001. Instead, it marks a steady slowdown that has lowered Flash readings from 103.5 last September (end of the third quarter 2000) to 101.8 in December (end of the fourth quarter 2000). A year ago in March, the Index stood at 102.7.
“It is important to remember that one month in the negative growth range does not constitute a recession,” said J. Fred Giertz, a UI economist who released the Flash Index today (April 2). A recession is defined as two consecutive quarters (six months) of negative growth.
Compared with a year ago, income-tax receipts were up slightly in real (inflation-adjusted) terms in March, while sales-tax and corporate tax receipts slipped.
The Flash Index is a weighted average of growth rates in sales-tax receipts, individual income-tax receipts and corporate-earning receipts in Illinois. The growth rate for each component is then calculated for the 12-month period using data through March 31.
